I am the co-founder of SocialRank and previously led business development and partnerships for online integrations at Dwolla, a payments startup based in Iowa, as well as for Aviary, a NY-based startup that provides a photo editing API for web and mobile devices. I'm active in the NY tech scene as the creator of the BD Meetup and an advisor to early-stage companies and have been featured in Business Insider as one of the “Top 20 Under 25” in the NY tech scene. I write a blog called Alex’s Tech Thoughts, have been published in Fast Company, The New York Observer, The Next Web and VentureBeat, teach Business Development classes and have been quoted on many tech websites including TechCrunch, GigaOm, The New York Times, Business Insider, Mashable, and PC Magazine. I hold a BA in Economics from Yeshiva University. You can reach me at Ataub24(at)gmail(dot)com.

Why Facebook Will Be Around For A Long Long Time Redux

MENLO PARK, CA - MAY 18: A 'like' sign stands at the entrance of Facebook headquarters May 18, 2012 in Menlo Park, California. The eight-year-old social network company listed their initial public offering on NASDAQ Friday morning at $38 a share and a valuation of $104 billion, making its IPO the third largest in U.S. history after General Motors and Visa. (Image credit: Getty Images via @daylife)

Immediately, bells went off in my head: in October 2011, I wrote a personal blog post about the sustainability and longevity of Facebook as a product and the value of user data acquired by Facebook. I wouldn’t be surprised if they unveil a search product that rivals Google, an advertising platform similar to Google’s AdSense, and other features that enable third parties access to information. It would be ideal if it were timed with the 180 day IPO share lockup sell-off period.

Below is my post from 9 months ago (with a bit of a Forbes facelift), much of which I believe still holds true today. This is why I remain bullish on my Facebook:

I was at a poker game with a few non-tech friends when they started talking about how Facebook is a fad and would go the way of Myspace soon. I tried to explain to them that if Facebook stays independent (ie does not get acquired, IPOs, Zuck stays at helm) and continues to make awesome tools that developers can leverage, then they will be around for a long time to come.

I think it goes back to two companies that could have been as big and data-intensive as Facebook is today and where they went wrong. These two companies are AOL and Myspace.

AOLAOL was the entry-point and first time most people had experienced the web. AOL monopolized this and could have “owned” the web. This would have led them to own the social network down the road (which, at its core function, is the hub for sharing and chatting with your friends). They had a killer product with AIM and Mail and morphing that into a social network was an obvious future step. The two reasons for the AOL decline were a closed ecosystem and the Time Warner merger.

From what I have heard, developers had a hard time with AOL and couldn’t really build off it. AOL wasn’t moving as fast as the internet was and because they weren’t giving developers the proper tools to build on their platform, the future of the internet was constructed elsewhere.

In terms of the mishandled merger, two primary mistakes were made. The first was a gross overestimation of AOL’s price — over 80% off in value since the merger in 2000. The second was a focus on dial-up service when people were switching to high-speed. Coupled with poor timing and execution, this was dead on arrival.

MyspaceMyspace blew up on the scene in 2003. They had significantly more users than Facebook and anyone could join (not just college students). The company was acquired by News Corp in 2005 for $580 million. News Corp recently sold off Myspace for $35 million.

Myspace’s issues were more on the spam and security centric. It didn’t help that News Corp owned them. The biggest difference between Myspace and Facebook was that Myspace allowed its users to use aliases, whereas Facebook made you use your real name, making a more meaningful social graph. Once Myspace lost the social network game to Facebook in 2008 (in terms of numbers) they had a hard time figuring out what they were. A social network? Music promotion site? Something else?

Facebook and Why They are DifferentFacebook will be around for a long time because they have figured out how to stay independent and provide developers with great tools to build the next “big thing” on Facebook, rather than somewhere else. Facebook has a slew of APIs that allow you to do things like Oauth via Facebook (Oauth stands for open standard for authorization and is the way you sign into Facebook on a third-party website without having to make a new account- “Log in with Facebook”), build apps on Facebook, push updates to your stream, and more.

Think of a company like Zynga. They have become a gaming monster. They capitalized on all the users spending hours on Facebook and built games that can leverage Facebook’s social graph. If Facebook didn’t have their API platform in place, Zynga would have been built on another platform or as its own stand-alone site/game. This is the clearest example of the next big thing being built on Facebook rather than off.

In terms of staying independent, if Facebook can go public and weather the storm that is the public market, they should have some smooth sailing. However, because most people don’t truly understand how the internet works (ie how web companies make money, understanding fundamentals of web, etc) I can’t imagine that once they go public they won’t have issues.

On the other hand, I wouldn’t be surprised if Facebook has a few tricks up their sleeves that they release around the same time as their IPO. Some things that come to mind are Facebook Search (Google goes in social networking, so Facebook goes into Search), Facebook Adsense (this is the obvious big one, I call that Google takes at least a 5% market plunge when Facebook announces their take on Adsense), bigger mobile push (mobile commerce included), Facebook credits major roll-out, and more.

I am very bullish on Facebook despite the early trading performance. It is important to think about the longer-term outlook of the company as opposed to the current state of their balance sheet. They have recently made strategic acquisitions, including the famed $1 billion Instagram purchase, to keep the product fresh. I am excited to see what Facebook has in store in the upcoming years.

Author’s note: This post was inspired by a blog post by Marc Andreessen, found here, and a few guys who don’t know how to play poker.

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